Chapter One

Chapter One
A Rude Awakening for Globalization.

The only law of history is the law of unintended consequences.
Professor Niall Ferguson, economic historian.

Chapter Highlights

“Greed is good”. So said the fictional character Gordon Gekko as the 1980s Wall Street stocks and bonds bonanza continued its seemingly endless progression towards record highs. Then, on October 19th 1987, global stock markets sank faster than they had done just ahead of the Great Depression of the 1930s.

This paragraph opens a short chapter that sets the tone for a constant theme that permeates the book’s examination of the decade it studies, the crazy world of high finance and the ‘madness of (global) markets’.

Unlike the 1929 Wall Street Crash, which led to a prolonged and deep global economic depression, the retreat to protectionist international trade policies and, arguably, World War II, the 1987 ‘Black Monday’ financial collapse was miraculously short-lived. Lazarus-like, markets rose again with a roar of hubris captured perfectly in Tom Wolfe’s fictional yarn, The Bonfire of the Vanities.

Meanwhile, in the real world of Wall St., Michael Milken and his associates created ‘innovative’ mezzanine financial debt instruments, technically known as ‘high-yield corporate bonds’ but which, amongst those who saw through the ruse, quickly earned the pejorative sobriquet ‘junk bonds’. It would have been funny were its implications not so serious.

By the end of the 1980s, debt worship was the new creed. The seminal business book Barbarians at the Gate was soon to be published, a reality-show dramatization of leverage and deceit surrounding the infamous RJR Nabisco management vs Wall St. buyout of the time. Greed was back, with more to come.

The scene is now set for a discussion of an extraordinary period in economic and political history (1988–1998) which had its origins in 18th and 19th Century political economy with the publication of Adam Smith’s seminal two-volume, five book treatise on market economics and free trade, An Inquiry into the Nature and Causes of the Wealth of Nations and David Ricardo’s 1817 book, On the Principles of Political Economy: And Taxation.

Ten Years explores a decade that embraces more than a century of economic and geopolitical dramas, certainly in terms of significant events and processes and especially with regard to a confluence of apparently unrelated historical strands which define the modern era. These globalization dynamics provide the book’s focus and are discussed in the chapters which follow.

While the mayhem and market madness of late 1980s Western financial markets described earlier continued to amuse, there were stranger and more profound forces at play in East Germany, Hungry, Poland, Czechoslovakia, Bulgaria, Romania, Yugoslavia, the USSR (as was) and, to a lesser extent, ‘nation states’ elsewhere in middle and eastern Europe.

And, from the wretchedness of a failed communist-inspired military engagement in Afghanistan, a man whom a smitten Margaret Thatcher famously described as someone “she could do business with”, quietly ascended to become the General Secretary of the Communist Party of the Soviet Union: Mikhail Gorbachev.

Gorbachev is most famously known for his twin policies of glasnost (openness/political freedom) and perestroika (restructuring/economic reform), and I will discuss his legacy in later chapters.


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All content © Colin Edward Egan, 2022